Guangxia (Yinchuan) Industry, a high-flying stock on the Shenzhen exchange, was suspended from trading yesterday amid accusations of fraudulent financial information. Ningxia-based Guangxia, with business interests from wine-making to bio-pharmaceutical products, hugely exaggerated its export revenue and earnings, and gave misleading information on its export prospects, the Beijing-based Caijing magazine claimed in its August issue. In February the influential journal ran a riveting insider account of the price-rigging scam of Shenzhen-listed China Venture Capital. The latest allegations are bound to pose a fresh challenge to the credibility of China's stock markets, already reeling from a series of scandals in the past year and widespread dismal interim results of listed firms. Officials of the Shenzhen exchange said Guangxia's suspension was prompted by the Caijing story. However, they gave conflicting accounts on whether the firm was under a regulatory probe for the alleged fraud. The firm, which revealed its hopes for a Hong Kong listing earlier this year, has been ordered to issue an official response to the media allegations. Guangxia officials could not be reached for comment yesterday. A company statement issued late yesterday said an official response was to be released on Tuesday following an emergency board meeting. The firm has requested its shares be suspended from trading on Monday and Tuesday morning to stave off extraordinary price movements. Citing data obtained from the customs office, Caijing reported that Guangxia generated about US$30,000 from exports last year, a fraction of the 180 million deutschemarks (about HK$633.24 million) it claimed. In March, Guangxia announced a three-year export contract, worth two billion yuan (about HK$1.87 billion) a year with major German store Fidelity Trading, which turned out to be a small trading firm with a registered capital of 50,000 deutschemarks, Caijing revealed. Those allegations threw doubt on Guangxia's net profits, said to be 417.64 million yuan last year. Guangxia's exaggerated financial data, aided by a generous dividend policy, helped send its share price soaring 440 per cent last year, Caijing said. Guangxia is not the first listed firm accused of crookery in a market known for its lack of transparency. The high-profile price-rigging scams of China Venture Capital and Yorkpoint Science and Technology have prompted the market watchdog - the China Securities Regulatory Commission (CSRC) - to crack its whip. Chinese legislators chided CSRC recently for slow action in those cases. Precedents suggest any investigation of Guangxia could be lengthy and the punishment lenient. Yorkpoint and China Venture Capital remain listed as regulatory probes continue. 'If a company performed reasonably well and resorted to frauds to embellish its record, it does not affect its listing status,' a Shenzhen exchange official said.